The IRS can write off all or some of your tax debt through “Offers in Compromise.”
Last year, 16 million individuals owed the IRS and about 25,000 of those individuals received an offer in compromise. The IRS usually likes to negotiate through payment plans or label accounts as currently not collectible status- where your allowable expenses exceed your monthly income.
Proof of Ability to Pay
To qualify for an offer in compromise, the IRS wants to know if it can or can't collect all the taxes before time runs out (10 years) from the day that the IRS charges you.
Upon granting you an offer in compromise, the IRS calculates your net equity in assets (home, IRAs, savings investments, etc) plus your monthly disposable income after allowable monthly living expenses.
Offers in Compromise are a Negotiation Process
Qualifying for an offer in compromise is just the first step. The offer amount will reflect the value of your total assets (home equity and IRAs).
These monthly payments will occur over a predetermined length of time and the method of payment.
In a lot of instances, a plain payment plan and/or a hardship status yields better results.
Curious about whether an Offer in Compromise might be worth your time? Check out the OIC Qualifier tool. The tool doesn’t calculate everything, but it does a give you an idea of whether you are a good match for the program.
To ensure the best outcome, please contact us or a tax professional to determine assets, liabilities, income, expenses and the best advocate on your behalf to negotiate with the IRS.
A tax professional may also determine the best IRS payment agreement for your desired outcome.